Firm ownership structure impact on corporate social responsibility: evidence from austerity U.K.

Abstract

ABSTRACT Corporate social responsibility (CSR) has become an increasingly important sustainable development issue in U.K. The main contribution of this study is to examine how firm ownership structure impacts good corporate governance and CSR in U.K. during austerity conditions. Following the financial crisis of 2007–2008, the U.K. government introduced austerity conditions which impacted firm CSR activities. From the initial sample of more than 250 firms, 50 consistently remain listed on the FTSE4good index during 2008–2012 and are analysed. The definition of CSR distinguishes voluntary and mandatory CSR construct. Findings indicate Board ownership structure and satisfactory firm performance impact on the level of voluntary CSR. Board ownership results suggest increased institutional and non-CEO shareholdings support a higher level of voluntary CSR engagement, whilst increased CEO shareholdings lead to a lower level of investment in voluntary CSR. In terms of satisfactory firm performance, results suggest positive attainment discrepancy supports a higher level of voluntary CSR, whereas greater potential organisational slack leads to a lower level of voluntary CSR investment. Effective governance and voluntary CSR association is more pronounced under conditions of high attainment discrepancy and low organisational slack. The findings suggest implications for adapting firm decision-making latitude and government policy between austerity and prosperity conditions.